MANILA, Philippines - December 19 marked the day when President Rodrigo Duterte signed into law the Tax Reform for Acceleration and Inclusion (TRAIN) bill. After 20 years, TRAIN will replace the old system of income tax to make way for a “simpler and fairer” collection.

Budget Secretary Benjamin Diokno confirmed that the law will immediately take effect in the first payout of January 2018. Diokno said, “This is the administrations biggest Christmas gift to the Filipino people as 99% of the taxpayers will benefit from the simpler, fairer, and more efficient tax [program].”

Under TRAIN, several reforms were made to make sure that low-income earners will pay nothing to minimal taxes while high-earners will pay more. Several products such as petroleum and beverages with artificial sweeteners are given higher excise levies. Taxes were also removed from some basic commodities.

Here are some of the reforms under TRAIN:

Lower tax or tax-free

Employees earning P250,000 or below annually are now exempted from paying income tax.

13th month pay and other bonuses amounting to P90,000 are also tax-free.